On February 21, 2018 the Italian Ministry of Economy and Finance released its draft transfer pricing rules to comply with the Article 8-10 OECD/G20 Base Erosion and Profit Shifting (BEPS) project. The draft rules are declared in their website for public consultation and comments and will remain available until 21 March 2018.
The draft decree outlined certain issues including definition of ownership required to be considered “associated enterprises” (i.e., more than 50% ownership). According to decree, the definition of “associated enterprises” has been aligned with the definition included in the OECD Model Tax Convention clarifying that companies under the control of the same individual would be considered as associated companies. Therefore, both juridical and de facto control should be considered.
The draft transfer pricing regulations include proposals for
- “arm’s length principle” with respect to inter-company transactions following BEPS changes;
- Contains draft procedures for obtaining corresponding adjustments in favor of taxpayers after a transfer pricing adjustment is undertaken by a tax administration of another State.
